Financial emergencies come unannounced. Short-term loans are great to meet your financial emergencies or when you are short of cash to meet your urgent needs like utility bills or other expenses.
A bridging loan Singapore is a short-term loan or a gap financing arrangement used in different scenarios. Here are some financial scenarios when you need a bridge loan.
Buying a Second Property
According to recent data, Singapore had around 1.08 million HDB units. The Housing and Development Board is a legal body that manages public housing. Many times people want to buy a second home and sell the existing one.
However, a home sale is a lengthy process, and you have to wait for months to get the cash in hand. The seller of the second property might not be ready to wait for such a long time, and they may have other prospective buyers waiting in line who can close the sale early.
In such a scenario, you can apply for a bridging loan in Singapore. The repayment term of a bridging loan is around 1 to 18 months, and you have to make full repayment of the loan before the loan term ends.
A bridge loan can be helpful to purchase a second property while you are waiting for the closing of the sale of the existing property. The repayment tenure is enough to complete the sale of your existing property and make full loan repayment.
Your House Is Facing Foreclosure.
According to a report published in This Week in Asia, the Singapore government findings have reported a worrying trend of house owners defaulting on mortgages. It has led to a sudden spike in the number of foreclosures.
If you cannot keep up with mortgage payments and your house is facing foreclosure, you can apply for a bridging loan in Singapore.
As per Singapore foreclosure laws, the mortgagor has an equitable title to the mortgaged party, and they can transfer the equitable title to the lender by agreement. You can take the loan amount to repay the pending mortgage payment and stop the foreclosure process.
For Business Operations
According to ACRA, Singapore has more than 400,000 registered business entities. Businesses that sell goods and services and receive payment only at the end can take bridge loans to meet their current business expenses. They can repay the loans after receiving payment from the customer.
Real Estate Companies
According to 2016 data, Singapore has around 5,981,000 businesses related to the construction industry. Construction companies need to infuse huge capital to construct the building, and they can sell and recover their costs after selling the property.
Such companies can use bridge loans to meet business operation expenses and repay the loan after selling flats and commercial properties.
How to Apply for Bridge Loans in Singapore?
Any individual in Singapore can apply for bridge loans provided they meet the eligibility criteria. To apply for a bridge loan, you need to be 21 years or older. The maximum age limit is 70 years. Also, the applicant needs to be the owner of the business or property.
Rate of Interest
Many Singapore lenders offer small amount bridge loans that can be useful to meet urgent financial needs. The rate of interest of bridge loans is in the range of 12% to 18%. The rate of interest varies with lenders. Hence, you need to be careful and check the interest rate before applying for a bridge loan with any lender.
Loan Tenure and Credit Score Check
Since it is a short-term loan, the average repayment tenure is 12 months. However, some lenders may offer longer loan payment tenures. The lender will verify your creditworthiness by checking your credit score. If you have a good score, you can ask for a lower interest rate.
To sum up, if you need cash, you can apply for a bridge loan. Most lenders allow you to apply online, and the loan approval is also quick.